Meanwhile, back in the real world

. . .a recession may well be looming. GDP growth for the second quarter of this year has been revised down to 1.25 percent. That’s the slowest pace since the third quarter of 2011.

According to Reuters, output was revised down to reflect weaker rates of consumer and business spending than previously estimated. Outlays on residential construction export growth were also not as robust as had been previously estimated.

Nor do things appear to be picking up in the third quarter. Says Reuters:

Data in hand for the third-quarter suggest little improvement in the growth pace, even as the housing market digs out of a six-year slump. Manufacturing, the pillar of the recovery from the 2007-09 recession is cooling, hurt by fears of tighter U.S. fiscal policy in January and slower global demand.

In fact, as Ed Morrissey points out, orders for durable goods dropped by 13.2 percent in August. And nondefense new orders for capital goods in August decreased 24.3 percent.

I’ve frequently written about research from the Fed which finds that since 1947, when two-quarter annualized real GDP growth falls below 2%, recession follows within a year 48% of the time. And when year-over-year real GDP growth falls below 2%, recession follows within a year 70% of the time. . . .

Growth the past two quarters has averaged about 1.6%. Not only does this mean the economy is growing more slowly than last year’s 1.8%, it is also slow enough to signal about a 50% chance of a recession within a year. And the third quarter also looks weak.

The anemic, three-year-old U.S. recovery is already running out of steam. And if it does, it may be several more years before we see unemployment below 8%.

What are the implications for the election? Obama’s economic narrative amounts basically to this: sure, it’s been more difficult than I thought to turn the economy around, but we’re finally seeing real progress. This line seems to be working well enough to keep Obama slightly above water. But if, as appears to be the case, things took a turn for the worse this summer, and if the impact of the leading indicators begins to make itself felt this fall, then Obama’s narrative may ring hollow as election day approaches.